Drug channel needs to amp up its CE potential

By Barbara White-Sax

The drug store channel isn’t maximizing its potential in the consumer electronics category. According to research by TWICE and the Stevenson Co., CE sales at Walgreens, Rite Aid and CVS amounted to $111 billion last year, less than 1% of the chains’ combined revenue. At Walmart, electronics comprise about 7% of sales. TWICE’s research also revealed that CE sales at all three drug chains were down last year.

“There’s much more to consumer electronics than photo,” said Steve Koenig, director of industry analysis at the Consumer Electronics Association. Koenig said drug chains should have a dedicated buyer overseeing the booming category, expand their selections and promote the category “front and center on circulars to let consumers know what’s available in their stores.”

Stephen Baker, VP industry analysis at the NPD Group agreed. “Tech continues to go small and mobile, and those products throw off a large accessory business [for which] drug stores can use their convenient locations, hours and frequent shopping trips to exploit,” he said.

Baker said that drug stores have done “a great job in leveraging their high foot traffic during the holidays to focus on low-cost, highly gifted products,” such as e-readers, MP3 players and GPS systems. “This past holiday, we saw products like tablets and netbooks in drug store channels as well. As those categories grow in awareness, those are likely to provide a tremendous holiday opportunity for the drug channel,” he said, noting that the channel should stick to products under $100. Drug stores need to maintain the momentum during the rest of the year.

The article above is part of the DSN Category Review Series. For the complete Consumer Electronics Buy-In Report, including extensive charts, data and more analysis, click here.